WORLD REGULATORY BRIEFING
Contrast that with setting up a new online casino or sports betting account. The prospect may have been attracted by an expensive marketing campaign or bonus offer, but the work of securing them as a customer is just beginning. There is age verification, proof of ID and address, security password, multi-factor authentication and multiple added friction points which are obstacles to completing the onboarding process. We are all-too familiar with many of the reasons behind the checks but that doesn’t make the reality any more acceptable to customers. And that is before the questions of affordability or single customer view are addressed. The industry invests a great deal of money acquiring customers only for them to drop out in the last part of their journey – the payment process – never to return. The situation is different but just as tortuous in a land-based casino. Operators may be convinced that their customers prefer cash but is that really the case? For customers, the casino will often be the last cash-dominated business they visit. They have to plan ahead to withdraw cash from a bank or pay ATMs or cash advance fees. Cash is not just a cost or an inconvenience for customers, it’s also a headache for operators. Handling notes and coins represents a huge expense for properties – from the cost of acquiring cash, to the people required to count it and transport it and the security issues involved. As we will see in the article that follows this one (see page 16), the early experiments with cashless casinos have thrown up some interesting results, not least by challenging the prevailing assumptions about what customers will respond to. There is evidence that the industry is ripe for a change and that change is on the way driven by a number of factors. There is a recognition that financial regulations like AML and KYC are here to stay and have to coexist with gambling regulation. That is encouraging the industry to invest in the adoption of the latest payment technology. The aftermath of the Covid19 pandemic has also had a profound impact on behavior. Customers, especially younger ones, interacted with the world in a completely different way for two years and the new habits they acquired are now embedded. Change is required to continue to attract those younger players. Covid persuaded people of all ages to embrace digital so that now cash is now more inconvenient for everyone, even seniors. The pandemic
came along at a point of maturity in the digital world which meant that most consumers had good experiences which they are happy to repeat. In parallel with these developments, there has been a mainstreaming of financial services in the gambling industry which is a sign of the increasing acceptance of gambling as an investable sector. That is attracting players like JP Morgan who previously would not have given the industry a second glance assuming it was too high risk. As highly regulated consumer-facing businesses themselves they feel they have a part to play in creating an ecosystem where gaming is at the heart but which extends to a seamless experience for F&B, lodging, entry and entertainment. The evidence so far is that will increase loyalty as well as maintaining customer funds within the ecosystem. Financial security and the user experience often go hand in hand. Many of us will resist the pain of setting up another mobile payment platform but if a customer is presented with the opportunity to download an app with a lot of the information prepopulated, they’re already halfway to adopting the technology. There is ample evidence that the adoption of new technology can give a boost to achieving regulators’ objectives too. The onboarding process provides opportunities to eradicate fraud and mitigate risks. The data generated as a result enables the industry to build up a picture of the customer that is more granular than ever. Even the location technology contained within mobile devices can help identify bonus abuse and other fraud and avoid bad actors from completing the onboarding process. It is an inevitability that online consumer transactions will attract criminals, but the digital breadcrumbs are part of identifying crime and preventing it. On the casino floor bill stuffing and structuring are easier to perpetrate when dealing in cash but, with an effective KYC process, it is a lot harder. Of course, collecting large amounts of data carries its own risks as recent cyber attacks have shown. For multinational businesses the implications of a breech can extend geographically well beyond the jurisdiction where the hack took place. European regulations are very different from those in the United States and punitive fines lie in wait for
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IMGL MAGAZINE | APRIL 2023
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